Understanding Credit Score Differences

Understanding Credit Score Differences

There are few numbers in life that matter as much to your financial outlook and well-being as your credit score. However, confusion is the norm for consumers when it comes to this important financial gauge.

The History of Credit Scores

Prior to the creation of standardized credit scores, lenders and loan officers would often develop their own "score card" to assess the risk of lending to a particular borrower. This score card could vary drastically from one lender to the next. The major issue with this original method was that it was based on a loan officer's ability to judge risk, rather than a common set of rules and specific calculations.

So, in the 1980's, the Fair Isaac Corporation set up the first general purpose credit scoring system based on credit bureau information in order to help remove the inherent inconsistencies that arose from having each lender perform their own credit diagnostics. It has since become known as the FICO score and the algorithm has been widely adopted by America's largest credit reporting agencies.

Why would my score differ between credit agencies?

The three major credit bureaus are Equifax, Experian and TransUnion. Simply put, the reason that the scores you receive may differ is that each score is dependent on the credit report that each receives and the scoring model they use.

In other words, Equifax might have not exactly the same information on you as Experian and vice versa. One credit bureau may be missing an account that either helps or hinders your score and will therefore report a different credit score than another credit bureau. If the system was perfect, this wouldn't happen. But since it isn't, you want to make sure that they all have the proper information by checking your free TransUnion credit report on Credit Karma and the others on www.AnnualCreditReport.com.

Why would my score differ between the same credit agency?

Credit bureaus use many different scoring models, even within the same credit bureau. Each bureau can use dozens of different credit score models based on the requirements of different lenders.

Each credit score model has a slightly different formula that takes into account some of the over 200 different factors of your credit report; like a thumbprint, no credit score model is exactly the same. In addition, credit scores can change anytime so you have to make sure you are comparing credit scores from the same day.

As an example, a mortgage company will get a different score than a company providing auto loans, since they are looking for different types of credit history and credit factors.

Other Available Scores

While FICO is the most famous, there are several other versions and providers of credit scores, such as VantageScore, NextGen, BEACON and EMPIRICA. Some scores are directly developed by credit bureaus, while others are developed by outside companies.

Is there a "best score"?

In a word, no. In order to protect revenues, credit reporting agencies will often position their scores as the best or the most predictive. In reality, all scores must adhere to similar guidelines to be truly predictive, regardless of the final output number. All credit scores are built from the same base set of data and statistical procedures.

Like many products and services in the marketplace, there are a plethora of different options for you (and the businesses that serve you) to choose from, simply because every buyer is different. Based on cost and effectiveness in each buying situation, there are credit scores for sale to satisfy each customer.

Score Ranges

Just as a point of reference, it may be important for you to know what the score ranges are for each of the major scoring systems. The higher your score the better, as it is a general gauge of your overall creditworthiness in the eyes of lenders.

  • FICO Score: 300 -850
  • Score from Experian: 330-830
  • Score from Equifax: 300-850
  • Score from TransUnion: 300-850
  • VantageScore 3.0: 300-850

Bottom Line

Because there are hundreds of credit scores that measure many different probabilities, consumers generally do not need to be overly concerned with the type of score or even their number. It's also important to note that your credit score is a variable which can change every time your credit report changes. For these reasons, monitoring changes within a single score over time can be a better way to gauge your overall credit health.

These complicated facets of credit scores are exactly why we developed Credit Karma. By keeping the bureau and credit scoring model consistent, we are hoping to provide consumers with a single, easier-to-follow point of reference on their credit health. Best of all, it's always free to check your credit score with us. In this way, you can access your score as often as you want and always have a consistent baseline to better understand how your score is changing.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

All Comments

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8 Contributions
716 People Helped

Helpful to 680 out of 763 people

The thing that baffles me is that this is a free service that is intended to help you make better credit decisions. People are complaining it doesn't have all 3 scores, that it isnt 100% accurate etc... people ITS FREE! What other site is free and lets you update your score everyday and alerts you to inquiries etc? If you want accuracy pay for a service..even then your score could change in a minute!

Reply by
CreditCruiser

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Also what I have found out is that this free site is generated off the Transunion report and that is usually the lowest of the three score agencies so if you have a good score here then you can be sure that you are doing okay.  And again it is free. 

Reply by
mulberrygal

8 Contributions
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Helpful to 263 out of 323 people

Try credit sesame. They are free and accurate. I just got a new car and they ran my credit and it compared exactly with credit sesame. Credit karma was wayyyyyy off.

Reply by
waa57att

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Helpful to 79 out of 103 people

Free that is not accurate is no help

Reply by
Tashinawin

8 Contributions
133 People Helped

What I find most helpful about Credit Karma is the access to information.  Personally, I don't find their Vantage Scores that helpful, to be honest.  But until credit rating is standardized across the board, all the financial institutions who offer financial credit-worthiness products will be vying to be "the" go-to score provider.  Obviously Credit Karma is supported by the Vantage consortium who hopes to become that across-the-board "gold standard."  SInce they represent three major providers, that's probably not a bad strategy.

Don't throw out the baby with the bathwater.  It's free.  It's got some good information on the site besides credit scores if you're willing to use it.

Reply by
dinahleigh

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Enter Your Reply Agree 

Reply by
Kenburden

3 Contributions
1 Person Helped

Enter Your Replying just want some easy system to correct errors.  I've been trying to make a correct for two years with no success and it a truly an error.  Hopeless credit system.

Reply by
Kenburden

3 Contributions
1 Person Helped

Enter Your The entire credit system is fake.  They are just making opportunity to create commerce.  So useless.

Reply by
Kingja55

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Nothing is free my friend. Ck makes their money by selling your info to creditors. You may notice an influx of calls or letters from debts from 10 or more years ago shortly after joining. No big deal really, but I would hate for people to go around thinking ck is a group of humanitarians just trying to provide folks with a free service.

Reply by
darlenam

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You idiot

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Unreal!!! I purchase my credit reports every other month. Since the last reports were pulled there have been no changes except the on-time payments, and my score still drops 14 points. I had three different people look at them. The F'in' reports are identical!!!! 

I think it's time to petetion congress for changes:

1.  Consumers should be able to get thier indididual credit scores and reports at least monthly at no charge.

2.  There needs to be more costly punative damages for credit reporting agencies, and creditors for not correcting, or producing complete documentation which substantiates their claim(s). (in a lot of cases, creditors/collection agencies have no obligation to verify the information they report unless the request comes from the credit bureau. And, then the creditor only has to send a confirmation to credit bureau that the debt exists.(no proof, just confirmation).

3.  When an individual's credit score negatively changes, the credit bureau should have to explain how/why the credit score changed.

It's my beleif that these 3 changes will do more to benefit consumers than any adverse effect it may have on creditors or credit bureaus. I look forward to hearing you thoughts.

3. 

Reply by
sak14

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Until when and if people will take the time to call their congresspersons and be very assertive, nothing will change because the hands that hold the money are in their pockets so it is up to us!!!

Reply by
feetsforwater

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Helpful to 14 out of 20 people

Petitioning Congress to do something.  With all due respect I have seen them do absolutely nothing for so long.  They are a joke.  If it would do any good I would gladly sign on and do it. 

Reply by
UPSIEDAISY

2 Contributions
66 People Helped
Helpful to 31 out of 59 people

Petetion congress?????  Really?????  Then we could all complain that our Government interfers too much in our daily lives.   Stop and Think, Folks!!

Reply by
vevoom

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Enter Your ReplyAmen

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People, Credit Karma is just a tool for you to use. Believe in it or not, it helps you to understand your credit rating and scoring. But don't live by it. It is only a tool, a reference point. The idea is for you to better manage your personal lives and finances. Don't get wrap around the numbers or the points. A few points won't make a difference in you lives. But a denial of credit may affect them. So thank Credit Karma for this site. Use it only as A TOOL! to your advantage in this crazy world.

Reply by
Arbor1949

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Helpful to 24 out of 25 people

Credit Karma provides hundreds of helpful information articles that the others don't! If you actually read and analyze what you see on the C K site, it's amazing! The numbers are just a simple guide and if read completely and you don't just look at the number you're not getting the benefit of what they are trying to do..... and for free! I fully agree with EatKimchi!

Reply by
Yos53

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Well said it is just that a tool, and it's free and worth what they offer. 

Reply by
UPSIEDAISY

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GOOD ADVICE.

Reply by
DebbieGary1954

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Enter Your Reply

Reply by
TreLaRain

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I echo that statement: WELL SAID!

Reply by
Givesuhe11

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Helpful to 0 out of 2 people

So a "Tool" that's off by 25-50% is a "Reference Point"?? Sorry, that is NOT how TOOLS work... Yeah, credit karma is free and you get what you pay for and usually, 99% of the time, "Free" is Junk... If it walks like a duck etc... credit karma is Junk...

"A few points won't make a difference in you lives. But a denial of credit may affect them"... Seriously?? A few points WILL get you denied, doofus, you contradicted yourself in four words

BTW, eatkimchi, how much do you get paid to post like this... I want a job doing this, (blowing smoke), to supplant my income!!

3 Contributions
68 People Helped

Helpful to 54 out of 60 people

transunion is so far behind time. i paid my auto loan off long ago. they say i still owe it! but let me be 8 seconds behind paying a credit card off.............. and it is all over their site. WHAT A BUNCH OF CRAP!

THEY SHOULD BE PUT OUT OF BUSINESS!

Reply by
darlenam

2 Contributions
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Helpful to 27 out of 28 people

Businesses do not always report to all 3 agencies. It is not Transunion fault. Your loan company does not report to them

Reply by
easymoney76

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Blame the fiance company who you financed the car through. Transunion can only report on what they receive. I had and stil have this issue with Amerifirst home improvement loan. They stopped reporting my payments to Transunion in Jan, 2014 because of they say a new reporting vendor they hired and software changes. June of 2014 still no reporting of payments. I filed a dispute with Transunion against Amerifirst and my balance was update within 24 hours. I just paid this loan off Nov !st still showing a balance if it's not corrected by the 15th of Nov. I'll filed another dispute with Transunion and have it corrected. So before you lay blame make sure you know who's to blame.

Reply by
kziemke

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You can dispute it on the Transunion website so they will change that. These agencies handle millions of accounts. It's up to us to keep up with our own credit reports.  Disputing wrong information is one way to do that. 

1 Contribution
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Helpful to 71 out of 74 people

Credit Karmas Transunion score for me has been the same when I pulled a Transunion report. I also have Life Lock which provides all three scores using Transunion as the main one. I have found them and Credit Karma consistent in their reports. As I understand the Credit card companies and others report your debt on the first of each month. That is why I pay my cards down before then and see my score rise. By taking your total credit card combined and adding them you then can divide that by your total credit limits. Example: One card has $5000 limit and another has $1500 limit which would give you $6500 total. Your debt on both cards are at $4500.

By taking $4500 divided by $6500 = 69% of your card usage. I think the credit agencies favor in a score best for those that are below 30%. Credit card have the worse effect on score. That could raise you back up about 10 points or more. I love Credit Karma and appreciate their services. I took up one of their offers on a Truck payment and lowered it from 6.9% to 2.98% which is saving me a bundle. Life insurance was the same. That offer some great services considering there was nothing back in the 70s or even 90s that could help some one moniter their credit.

Reply by
DeepDarkStar

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"Credit card have the worst effect on score". Correct and Incorrect.

Credit cards are basically needed to start your credit score at a good level. I knew people who didn't have credit cards. Their score was terrible. Banks denied loans.

I have 4 credit cards. My score is good because I have at least 2 with less than 30% debt and never make late mayments. I have small and large limits. I also have an active unsecured loan, with college debt.

Remember not to get into the trap of credit cards- spending too much and not paying it off. I ran into that situation (I was almost at my limits) when I graduated college. It took at least 6 months to slice my credit card debt back down and improve my score.

Reply by
patelzeenat

1 Contribution
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Helpful to 7 out of 7 people

I see you use LifeLock. Is this a good service and worth sepnding montly fees on?

Reply by
gran2449

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4 People Helped
Helpful to 4 out of 11 people

How did you come up with $4500? That doesn't make sense to me?

3 Contributions
258 People Helped

Helpful to 187 out of 211 people

So my score was 794,  Then I sold my house and paid off the mortgage and also paid off a car loan and the score drops to 780.  This is such a scam and a joke to the American consumer who is fiscally conservative.  Shouldn't paying off loans increase your score? 

Reply by
matthewbrahm

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Helpful to 52 out of 53 people

The reason why is because you closed two accounts so quickly.  having those acconts open and making monthly payments is what increases your score.  I know it doesn't make a bunch of sense, but I guess the way they see it is something like this: Well, maybe the person just came up on a bunch of money, and tried to pay off as much as they could." I guess they think it shows lack of responsibility.  Stupid, I know.

Reply by
ikhoseo

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Helpful to 207 out of 224 people

When an account such as a auto loan or mortgage is paid off, the account is then closed. While the account was open, you had a limit and open balance. For example, if you had a $30k auto loan, and a had only a few payments left, you are utilizing less than 10% which will give you a higher score. Once the loan is paid, it is closed and your available credit decreases...hence the lower score. However, this is temporary and your score will increase again over time.

Reply by
hatson

3 Contributions
5 People Helped
Helpful to 3 out of 5 people

I heard ya ... I've paid off two mortagages and haven't carry a car loan ... the more liquid I become the worse the score.... I always pay 100%of my credit cards monthly and that doesn't seem to help....

Reply by
kenhudak

1 Contribution
0 People Helped

Yep. The credit score doesn't have anything to do with you personally, rather, think of it as a measure of how profitable you are to the debt slave establishment. Banks don't really want to deal with fiscally conservative people like yourself because they miss out on overdraft fees and monthly running CC balances that really rack up the interest, etc.

Reply by
cherished925

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you would think it does but it dosen't because now your revolving credit is gone

Reply by
Synders

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0 People Helped

That DOES seem logical, doesnt it? All the credit agencies want is to see you pay off each payment on time and keep the balance of all credit cards one-third or below. It's like - if you were going to lend someone money, but not sure if they'll pay you back. So you find a place to see what a good history they have with paying people back. It's weird, but the credit card companies love to nickel-and-dime you with fees. Like a bank does. So if you paid off your car they can't charge you interest on the loan anymore. They can't nickel-and-dime you anymore. Your credit is fine. You have to think like a credit card company. Banks are the same way. If you overdraw on your account by accident, they don't care. They don't want to hear excuses.  If you deal with a credit union, they're your friends. They understand that things happen unexpectedly. I usually tell them right away that I'm sorry but I'll get it taken care of right away and they usually remove the fee...credit card companies and banks are crooks to me.

Reply by
creditcaddy

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Helpful to 2 out of 4 people

I am starting to think that having all these credit reporting acgencies out there is a scam. None of the numbers match. I think they use scare tactics to get consumers to go into more debt. I am being ****ed for being fiscally conservative. I have no debt and have plenty of savings and a poor credit score. I can't any credit because I don't have any credit. I refuse to pay high credit cards fees for a better credit score. I was forced to take a small secured loan at my local creit union to help raise it.

Reply by
ddiaz1983

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It is a scam.  Welcome to reality.

6 Contributions
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Helpful to 4 out of 5 people

Bottom line.... FICO IS THE ONE AND ONLY SCORE USED BY ALL LENDERS across the USA when evaluating you for credit. Name one bank that uses Vantage???? please!! Name one!

Credit Karma Team
Top Contributor
1483 Contributions
1420 People Helped
Helpful to 2 out of 4 people

Hi Djrocc7,

This is simply not true. Many lenders use multiple score models, and many use their own proprietary models. Banks do not typically publicize the score model they use to make a decision. Even if they use a FICO score, there are 50+ different FICO models to choose from. 

2 Contributions
26 People Helped

Helpful to 26 out of 37 people

Getting penalized for not having debt is a no,no! It's just not right that you HAVE to HAVE some kind of history of debt payment to get good rates. I so bad want to pay cash for everything (working on that) and not worry about all this doodoo! Someone needs to put a cattle prod to the credit agencies to do an accurate job at reporting. And a faster job on taking off things that are paid off and don't need to be on record. They're sure quick to add the negative to your list. How about we all barter---------?

Reply by
silent357

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Helpful to 15 out of 16 people

In order to get credit, you would have to show you can pay on/ off a loan or credit card. It's that simple. If you have no debt, how are agencies/creditors supposed to know if you can handle paying on a loan? Just my opinion.

Reply by
Tashinawin

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You are right It's NOT fair.  And although it may not be good for consumers, that mode IS good for the credit card companies and banks who loan out the money.  If you look at the fine print on any credit card agreement, it basically says they can change anything they want at anytime.  If you don't like it, your option is to close the account and pay off the remaining balance. Which, by the way would make your credit rating go down for a while.

They want to to carry sustainable balances and to continue to pay them off over a very, very long time so they can make more money off of you.  But not TOO much debt relative to your credit limits. Otherwise, you might claim bankruptcy and they lose their money.  But don't worry.  Credit card companies and the banks that offer them  NEVER lose money overall on their credit card business.  Which is fine by me.  I just wish they weren't QUITE so predatory.

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 <quote>This is because whenever u take on new debt your score usually drops at first and then as you make steady payments on it u get positive credit for not only making on time payments but for lowering this new debt.</quote>

Why doesn't the government put a stop on this absolutely idiotic thing called credit score? People that have no debt and only one credit card, will always have a bad credit score. Absolute bs.

The banks, car dealers and whoever prefer customers that carry an addional financial burden already.

An entire economy based on debt. If you have no debt, then you are simply non existant for banks and credit rating agencies. No wonder the rest of the world is laughing about the US.

Why can't we switch to keeping track of negatvie entries such as late payment, default etc. instead of punishing people that pay on time, carry no balance?

Reply by
onthegrid

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Helpful to 5 out of 6 people

Other countries have credit bureaus and credit cards too. Creditworthiness is determined based on history as well.

Reply by
Givesuhe11

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"No wonder the rest of the world is laughing about the US." 

Thanks to TranUnion, equifax, etc... And thanks to sites like credit karma inc...

7 Contributions
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Helpful to 28 out of 34 people

I have a traditional score of 772 and a Vantage score of 702 (Grade C). Does that indicate some sort of issue? I have recently applied (successfully) for a mortgage.

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